Is Bitcoin the Future of Money, or Just the Future of Buying Internet Drugs?

Bitcoin is a digital currency that was introduced in 2009, by a mysterious man – who may or may not exist – known as "Satoshi Nakamoto". Since then, they’ve become the payment of choice for the kind of nefarious websites (such as Silk Road and The Armoury) where you can buy everything; from kilos of uncut Afghan heroin, to bulk shipments of C4 explosives, without having to worry about the police getting all up in your business.

These encrypted online marketplaces use Bitcoins as their currency because there’s almost no way to trace the transactions. They aren’t regulated by any government authority, effectively making Bitcoin a decentralised currency, free from capitalist corruption – the only problem with this is that the value of them changes erratically. You could be a Bitcoin millionaire one night and a pauper the next.

With this in mind, we went to the currency's official 2012 Conference in London this weekend to see if Bitcoin has a future beyond letting strange people buy illegal weapons and large quantities of drugs on the internet.

The first talk I attended was titled “Printing Guns is Humanism”, held in a large conference room full of hackers, socialists, anarchist programmers and other journalists. The speaker was a man named Cody Wilson. He took to the stage and explained that his company, Defense Distributed, wants to enable anyone in the world with a computer, an internet connection and a 3D printer to print out real, working guns at the click of a mouse button. All you’d have to do is download a file from the internet and, within minutes, you’d be armed and dangerous.

One of Cody's printed machine guns.

Cody first tried to gain funding for his business model using Indie Gogo, where he raised $2,000 in 22 days. Once the organisation got word of the printable gun idea, however, the fundraiser was shut down and all of the money was refunded to the backers, so Wilson decided to raise money using Bitcoins instead. Within a month, he’d raised $17,000 worth of Bitcoins. He now plans to build his business and see if it will ever be possible to market deadly weapons to any small-brained 11-year-old who's figured out how his home printer works.

I don't know if it was just me being cynical, but the integrity of his Bitcoin affiliation seemed a little suspect to me. At one point, Wilson – a libertarian – said, “Why should we even have gun control?” and then quoted Russia Today economist Max Keiser, who once said that “Bitcoin is the currency of resistance”. With this kind of talk, it seemed as if Cody Wilson was just playing on the goodwill of Bitcoin enthusiasts and social anarchists to justify and moralise his very dangerous business idea. Maybe not, but I doubt Wilson would take a million Bitcoins over a million dollars.

Later, a man named Juri Matilla tried to simplify the legislative issues that Bitcoin might come up against in his legal seminar. The question “Is Bitcoin legal?” is apparently not that simple to answer, as it has expanded into a part of society where legislation doesn’t exist yet, which makes everything doubly confusing. Put simply, the invention of Bitcoin is what Matilla referred to as a “disruptive innovation”, which is basically a brand new progression in technology/economics that could disrupt things so radically that we begin to behave as a society in a completely different way.

Therefore, we have no idea what could happen to Bitcoin if it expands and becomes a more mainstream currency. Matilla theorised that the people behind it could end up in court in ten years, with governments trying to form laws around it despite its decentralised status – after all, it can’t be exempt from tax if you’re buying taxable products with it. He knew his stuff, but what I learnt from Juri Matilla’s legal seminar can be best summed up with the last thing I wrote down in my notepad: “Future if Bitcoin becomes successful in mainstream society = probable mayhem”.

It was kind of odd that these digital enthusiasts have regressed to a physical "Bitcoin" magazine, but whatever.

Birgitta Jónsdóttir – social activist, Icelandic member of parliament and the producer of WikiLeaks’ collateral damage video – was the next to speak. She said Bitcoin officials needed to start writing their own laws, because bankers and capitalists will simply write them out of their liberties if they don’t. She had her heart in the right place and got a round of applause when she screamed, “Our privacy online is fucking sacred!”

Her angle made a lot of sense to me. She seemed to promote the concept of the public controlling their own money, whether that’s via Bitcoin or downsizing social systems, more than just being an outright Bitcoin fanboy, like some of the earlier speakers.

I left one of the seminars to get a drink (they had free water! Socialism, FTW) and bumped into two masked hackers from Berlin called “Smuggler” and “Frank”, who were having a cigarette out the front of the hotel.

VICE: Hi. What’s with the masks?Smuggler: It’s about beating surveillance. London is known for having too many cameras and I’m pretty pissed off when it comes to being photographed everywhere I go. You could take down the cameras, but I’m an anarchist so I don’t believe in using my power against the will of other people, so I’m wearing a mask instead.Frank: I think the Big Brother nation will become ubiquitous and we’ll all be constantly tracked by cameras that will identify our faces, so now it is time to make a stand against them.

What if the police stop you?Smuggler: Before doing it here, I talked to the police and asked what the legal status is and they were cool with it. They had a smile and were a little bit wary of what I was up to, but they were cool.

But what if some rogue cops try to force you to remove the masks?
They have no legal power to force us to take them off in the UK.

Actually, yeah, I guess it’s on the the same legal ground as a woman wearing a burqa. It’s just a good job we’re not in France.[Laughs] Yeah, on the other hand – being caught wearing a burqa there and being fined would be worth it. Screw them.

As hackers and anarchists, what’s your main interest in Bitcoin?Frank: It’s a great technology to bring us more freedom, because it can circumvent the traditional banking system and allow us to transfer very quickly.

How do you feel about it being the currency of things like Silk Road?Smuggler: Well, Silk Road has never used force against anyone. It sells illegal, dangerous stuff, but people are going to get that somehow and Silk Road isn't personally attacking anyone, you know? If you look at what the drug war has done to our freedom, you could say it really sucks. All it's done is drive up the profit for the drug cartels. Look at Mexico. In my opinion, stuff like Silk Road should be much bigger because it would help to drive the cartels out of the game.

How would you like to see Bitcoin grow in the future?Frank: I’d like to see it somewhat replace paper money and things like Western Union, taking away the profit from the banks. I’d like to see a lot of over the counter exchanges using Bitcoins with smartphones.

What about someone like my grandma, for example, who doesn’t use the internet? She’d end up penniless if Bitcoin took over.Smuggler: It’s not about Bitcoin becoming the only thing on the market. It’s about having other options. I’m a big cash lover, actually. Bitcoin is more about having a more competitive market place of currency – not having a legal monopoly on currency. The cool thing with Bitcoin is that it’s a secure public ledger. For example, in Third World countries, having Bitcoin to fund property would allow poor people to capitalise on their houses, instead of having their money stolen from them all the time by the banks.

–

The notion that Bitcoin could help Third World countries is strong, and I guess the idea of Bitcoins being used en masse to level the playing field a bit gives enthusiasts something solid to hold on to, but I’m still not a convert. In reality, I just can’t see that the “global elite” would ever allow something so easily accessed to destroy their empire of greed. Surely, if the banking psychopath brigades are as powerful as everyone thinks they are, they’d somehow just make sure Bitcoins become illegal tender, anyway?

Perhaps I’m just not getting it, but what bugs me the most is that a lot of people who collect Bitcoins sell them on for real paper money – they totally undermine the hard work the diehard Bitcoiners have put into the digital currency.

This may come back to bite me, but I can’t see the theories of what Bitcoin could achieve translating well into practice. Gavin Andresen, a developer of Bitcoin, was even quoted telling people “not to make heavy investments in Bitcoins”. This doesn’t mean it can’t become an integral part of buying online, but PayPal is an integral part of buying online and that isn't gonna bring down the New World Order any time soon. I guess if they can at least harm the greedy bastards in some way, while helping us proles gain a bit more control over our lives, then every Bitcoin spent is worth it.